Bigger is Better at Kootenay: Margaux Acquires Land, Discovers High-Grade Gold and Zinc in BC

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In what could be the most concerted land-consolidation efforts ever in southern British Columbia, Canada, by an exploration company, Margaux Resources (MRL:CA)(MARFF) has cobbled together past-producing mines and promising properties in the Kootenay Arc, located just over the U.S. borders of Washington and Idaho. In doing so, Margaux has exposure to gold, silver, zinc, lead and tungsten, including the Jersey-Emerald Mine that ranks as the third-largest past-producing zinc-lead mine in the province and second-biggest past-producing tungsten mine in North America. A land package covering claims spanning over 24,000 hectares (~60,000 acres) got bigger this month and so did the library of data showing high-grade metals, putting Margaux in a position to successfully raise additional capital to keep moving its projects forward.

More Land

Over the past year or so, Margaux has been locking together pieces of a large puzzle to assemble a nearly contiguous land position. The company continues to add in missing pieces through staking and acquisition, this month expanding its property around Sheep Creek, Ore Hill to the south and Jersey-Emerald to the southwest with 1,670 hectares of newly acquired claims, effectively growing the portfolio by about 8 percent.

The new property rights, acquired from a third party for only staking costs, include 13 mineral claims and now give Margaux over 24,500 hectares of mineral tenure in the region.

Linda Caron, VP of Exploration at Margaux astutely summed up the acquisition in saying, “The newly acquired claims encompass the extension of the favourable geological setting that hosts the orogenic gold mineralization revealed to date, are highly prospective for additional discoveries and are a further step in the consolidation of a dominant land package.”

More Gold

The 3,744-hectare Sheep Creek property that part of the new claims adjoin has historical production of 623,000 ounces of gold at an average grade of 0.43 ounces per tonne. At today’s spot gold price, that’s about $780 million. Margaux thinks there’s plenty more high-grade gold where that came from across the 34 past-producing and 55 known veins in the Sheep Creek Gold District. Grab samples have assayed as high at 71.5 g/t gold.

While drilling is being completed at Sheep Creek, results from rock samples arrived this month, supportive of the high-grade gold thesis. Grab samples from the Motherlode and Bluestone veins included values up to 15.5 g/t gold. Other impressive samples assayed 9.23, 7.59 and 8.51 g/t gold, respectively. Results from the drill program are expected early in 2018 to lend more color to the resource at the property.

Due east of Sheep Creek is Margaux’s 1,311-hectare Bayonne gold/silver property. In 2017, 13 holes were drilled totaling 2,089 meters. Exploration has discovered a new vein, dubbed “North Ridge,” about 150 meters east of the eastern-most point of the Main vein. A recent rock sample from the new vein graded 13.0 g/t gold and 22.2 g/t silver.

The data to date is consistent with the historic resources at Sheep Creek and Bayonne. For instance, a historic resource for Sheep Creek shows Proven reserves of 36,391 tonnes at 13.4 g/t gold and Probable reserves at 31,908 tonnes at 18.2 g/t gold. At Bayonne, a historic resource shows 29,730 tonnes at 12.8 g/t gold in the Measure and Indicated category with another 95,000 tonnes at 14.9 g/t gold Inferred.




More Zinc

At the company’s 1,643-hectare Jackpot zinc/lead/silver property, the northernmost project in the portfolio, complete results from a nine-hole 2017 drill program were received early in the month, delineating a high-grade zinc zone, as well as broad mineralization near surface. Margaux is adding to a data set that includes over 2,000 meters of underground workings and 143 surface and underground drill holes (+11,000 meters). Grab samples have returned grades as high as 54.3% and 52.6% zinc.

The latest data, which covered the last five holes drilled in the 2017 program, was highlighted by several significant intersects, including 8.8 meters grading 7.13% zinc, 0.93% lead and 8.4 g/t silver; 8.5 meters at 6.66% zinc, 0.70% lead and 6.5 g/t silver (both in drill holes in the Jackpot East zone); and 6.0 meters grading 6.52% zinc, including 2 meters grading 14.9% zinc, in the Jackpot Main zone.

Broad, low-grade zinc was hit in seven holes, including 163.9 meters at 1.41% zinc, 0.13% lead and 1.7 g/t silver; and another intersect of 50.68 meters grading 2.30% zinc, 0.22% lead and 2.6 g/t silver.

The assays were in line with the results from the other drill holes released in October and November that indicated rock containing zinc, lead and silver likely extends beyond the 500 x 1,000 meter area that was tested in the program.

“We look forward to seeing how far reaching the mineralization is, especially considering the 2017 drilling only covered a small portion of the property," said Margaux’s Caron, as she plans for exploration in 2018.

Margaux President and CEO Tyler Rice added, “The combination of high-grade results plus large tonnage, lower grade, near-surface mineralization is a game-changer for us, especially in the current high-price zinc environment."

Rice was referencing the fact that zinc prices have more than doubled to decade-high prices since hitting a multi-year low in January 2016. The fourth-most consumed metal by volume, there are not enough producing mines to balance a supply deficit. However, the rebound in prices has breathed life in to the industry and highlighted the near-term need for more zinc, prompting base metal mining behemoth Glencore (LSE:GLEN), the world’s #1 zinc producer, to say it is restarting production at its Lady Loretta mine in Australia.

More Cash

At the end of the June quarter, Margaux had about $2.2 million in cash on hand. In order to keep pushing ahead with exploration and proving out resources across it land position and to beginning a project processing historic tungsten tailings, Margaux last month initiated a non-brokered private placement seeking to raise $3 million by issuing 8.3 million units at 30 cents each and 1.4 million common shares on a “CEE flow-through” basis at 36 cents each. Each unit consists of one share of common stock and a half warrant to buy another share, with each full warrant exercisable over 24 months at 40 cents each. The first tranche of the private placement closed on December 7th for gross proceeds of $1.7 million, the second tranche of the private placement is slated to end on or before December 22, 2017.

Despite the developments, Margaux remains underappreciated by the retail investment community as measured by a market capitalization that’s equal to only about 1,000 ounces of gold, not to mention more than $7 million that has been raised since July 2016 and used to build and explore one of the largest compilations of diversified mineral properties in southern B.C. The point is simple: When it comes to gold, silver and other in-demand metals, more is indeed better and that’s what Margaux has going on.


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Companies

Symbol Name Price Change % Volume
MRL:CA Margaux Resources Ltd. 0.21 -0.01 -4.55 6,350
MARFF Margaux Resources Ltd 0.16 0.09 144.84 1,000

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